In the not-so-distant past, applying for a loan meant a visit to your local bank, sitting down with a loan officer and providing a bunch of documents to verify your income.
These days, the rise of online banking and tools like Instant Bank Verification (IBV) has revolutionized the loan application process, making 100% online applications possible. However, while applying online seems to be the most convenient choice, is there still any advantage to applying in person?
Is It Better To Apply Online Or In Person For A Loan?
In a nutshell, the answer is, “it depends”. Of course, online applications offer a degree of speed and convenience that in-person applications simply cannot match.
However, in-person applications will provide a level of customer support that you won’t get with any online bank or loan application. For some people, that human element can be worth waiting around for.
Applying In Person For A Loan
Depending on the lender and type of loan, you might have the option of applying in person, online or both. Generally speaking, applying in person gives the opportunity for personalized assistance and face-to-face interaction, which can be particularly helpful for first-time borrowers or those with unique circumstances or questions.
The downside is, in-person applications will almost always require more time and effort compared to the speed and convenience of online applications.
Learn more: How To Get A Loan From The Bank?
Pros Of Applying In Person For A Loan
- Better customer service: Loan officers can offer personalized assistance and address your questions and issues directly, which can be hard to find with online applications.
- Guidance: Borrowers can get help with application details as they fill out the application.
- Stronger relationships: In-person applications can help establish rapport with lenders, which might be beneficial in future.
Cons Of Applying In Person For A Loan
- Time-consuming: Applying in person usually requires waiting in line or scheduling an appointment, plus there may be a limited number of hours during which a loan officer is available on any given day.
- Harder to compare offers: While most online lenders allow you to prequalify and easily compare offers, that’s not often possible with an in-person application, which makes comparing loan offers more of a challenge.
- Slower process: Loan approval and funding generally will take longer compared to online applications.
- Documentation: You’ll likely need to provide physical copies of all of your required documents, adding an extra step to the process for you.
Applying For A Loan Online
Most lenders today, particularly private and online-only lenders, offer customers a streamlined and often very fast application process. These are designed to be quick and easy, which makes this method a good option for those short on time.
That said, traditional financial institutions like big banks and credit unions may still require in-person visits for certain loan types, such as mortgages, RRSP loans, or auto loans, where more detailed documentation or face-to-face discussions are necessary.
Pros Of Applying For A Loan Online
There are many benefits of applying for a loan online from any lender including banks, credit unions and private lenders. Here are some advantages:
Easy Digital Process
For basic personal loans, applications can take less than 5 minutes to complete with certain online lenders. Moreover, some may not even require any documents except for a personal ID due to instant bank verification (IBV).
Instant Bank Verification (IBV) is a digital process that allows lenders to securely access and verify an applicant’s banking information immediately. This further streamlines the application and funding process by eliminating the need for you to upload documents, and instead verify your details via your bank account itself.
That said, some traditional lenders may offer only hybrid applications for certain loan types.
Fast Approval And Funding
Many online lenders have a partially automated underwriting system. As such, they can often approve and disburse funds within 24 to 48 hours. Many also offer funding via e-transfer, which can deliver funds within 30 minutes after approval.
Availability
With in-person applications, you generally have to wait and schedule an appointment to apply for a loan. Instead of waiting, you can apply and get approved anytime, including the weekends depending on the lender.
Cons Of Applying For A Loan Online
- Room for error: It’s easy to enter incorrect information on an online application, especially with auto-fill and predictive typing. Mistakes on loan applications can lead to rejections or the lender requiring further information and documentation.
- Safety concerns: Some borrowers may justifiably worry about sharing their personal information online, or granting a lender access to their bank account details with IBV, for example.
- Customer service: When applying for a loan online, whether it’s with a private lender, bank or some other alternative lender, accessing human support when you encounter an issue can be difficult.
What Types Of Loans Can You Apply For Online?
You can typically apply online for most types of loans, including personal loans, payday loans, business loans, and even auto loans or mortgages.
However, the process and documentation requirements will vary depending on the lender and the loan type. When it comes to more straightforward loans, like personal or payday loans, the application can often be completed entirely online in a matter of minutes.
For more complex lending products, such as mortgages or business loans, a lender may allow you to begin your application online, but then require a phone call or in-person visit to finalize the application.
Learn more: Best Online Loans In Canada
Rise Of Instant Bank Verification
Instant Bank Verification (IBV) is a digital process that allows lenders to securely access and verify an applicant’s banking information immediately. Instead of submitting physical documents like bank statements or proof of income, as a typical loan application would require, applicants can simply provide their banking login credentials through a secure portal that is hosted through third-party companies such as Plaid or Flinks, and skip those steps of documentation and verification.
This enables lenders to instantly access your bank statement temporarily, which they can use to assess your financial details such as account balances, reliability of income, and identity.
As a result, IBV technology is increasingly being used by private lenders in particular, and significantly speeding up their loan approval process. Plus, because it removes the need for documentation, IBV also reduces the risk of errors as well as enhancing overall convenience for borrowers.
Learn more: Have You Made These Mistakes On A Personal Loan Application?
Should You Apply Online Or In-Person For A Loan?
If you’re still on the fence about whether you should apply in-person or online, here are some reasons you should apply online vs in-person:
Apply Online If:
- You Want To Get An Estimate Or Pre-Approval – Most online lenders will give you the chance to prequalify without affecting your credit score. Most pre-approved offers will allow you to see exactly what rates and terms are available to you, making it easier to compare options.
- You’re Looking For A Lender With Fewer Requirements – Most non-traditional lenders who cater to borrowers with poor credit or lower incomes typically operate online. As such, if you’re looking for more accessible loan options, online lenders will be the best route.
- You Prefer Speed And Convenience – If you’re in urgent need of cash, applying online with a lender who offers same-day approvals will be your best choice.
Apply In-Person If:
- You Have A Strong Relationship With The Lender: If you’ve got a well-established relationship with your bank, applying in-person for a loan might get you better access to potential discounts and deals compared to an online application.
- You’re Not Tech-Savvy: If navigating digital platforms and websites feels uncomfortable or overwhelming, an in-person application can provide a more familiar, guided experience.
- You Prefer Direct Customer Service: Face-to-face interaction allows you to ask detailed questions, clarify doubts, and receive personalized guidance throughout the loan application process.
Bottom Line
Whether you apply for a loan in person or online really comes down to your personal banking preferences. For most of us, it’s going to be a choice between the benefit of face-to-face customer service, versus the convenience and speed of online applications and funding.
That said, if you’ve got a strong relationship with your bank then showing up at your local branch and asking about rates, terms and discounts could well be worth your time. And if not, there are plenty of great deals to benefit from with the many online lenders across Canada today.
